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GM Announces New Round of Job Cuts and Lower Prices

Mil Arcega
Washington, D.C.
March 29, 2006

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American carmaker General Motors is laying off hundreds of salaried workers, after suffering losses in the billions of dollars last year. The Detroit-based automaker is in the midst of a major restructuring and has already announced plans to cut 30,000 hourly workers.

Bruised by increasing foreign competition, and battered by losses totaling more than $10 billion last year, the world's largest automaker is bracing its workers for a new round of job cuts. G.M. said fewer than 500 salaried workers at 30 U.S. locations are immediately affected, but Paul Ballew, G.M.'s chief of Global Marketing, said the layoffs could run into the thousands before the end of the year.

"It certainly has been a challenge. We're all focused on the fact that it's not an easy time but what we need to do is get the company healthy again in North America, which requires tough decisions," he said.

This was the second major announcement in a week from the Detroit-based automaker, which offered early retirement buy-outs last Wednesday to hourly union workers in an attempt to cut 30,000 union jobs and close 12 manufacturing plants by 2008.

"What's going to be coming to G.M. hopefully through this process, will be a leaner and more competitive manufacturer," said Ballew.

To become more competitive in an increasingly crowded field of domestic and foreign automakers, G.M. has adopted a new marketing strategy, slashing the average price on most of its cars and trucks by $1,300. G.M. says the new pricing plan will mean fewer discounts and rebates.

Auto analyst David Zoia says it's an ambitious plan and he says G.M. needs it. "There's a big package of things they have to do and time is of the essence."

G.M.'s auto sales are up 1.5 percent in the first quarter of 2006, compared to an industry wide increase of 3.8 percent.

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